Tin tức thì trường

Nathan Janzen, the senior economist at the Royal Bank of Canada (RBC), notes that the Canadian employment slipped 2k in June, but was still up 421k from a year ago.

• “The tiny dip in employment – given the size of ‘normal’ swings in this notoriously volatile report – does nothing to change the narrative that Canadian labour markets still look relatively solid. Employment is still up 421k from a year ago.
• The unemployment rate ticked up to 5.5%, but from a new multi-decade low of 5.4% in May, and labour force participation rates are still sitting around all-time highs once controlling for population aging.
• Probably more importantly, wage growth jumped to 3.8% in June from 2.8% in May.  The wage numbers, like the headline employment count, are notoriously volatile, so we would take the latest surge higher with a big grain of salt.”

Rabobank's analysts note that the U.S. President Donald Trump has this month stepped up his verbal intervention in the FX market.

• “In a step away from his now familiar outbursts against the policy of the Federal Reserve he has accused Europe in addition to China for playing a “big currency manipulation game and pumping money into their system in order to compete with the USA”.
• The accusation comes a day or so after the President nominated two doves to fill vacant board positions at the Federal Reserve.  Trump’s wrath regarding USD strength coincided with the release of a larger than forecast US trade deficit for May.
• Although it would be highly unusual for a US government to attempt further measures to weaken the USD, it is not beyond the realms of possibility that the Trump administration will try.  This, however, could bring some unwanted long term effects for the US.”

The Ivey Business School Purchasing Managers Index PMI), measuring Canada’s economic activity, declined to 52.4 in June from an unrevised 55.9 in May. That was the lowest reading since February.

Economists had expected the gauge to hit 55.0.

A figure above 50 shows an increase while below 50 shows a decrease.

Within sub-indexes, the inventories indicator dropped to 50.9 in June from 53.1 in the prior month, while the supplier deliveries gauge tumbled to 48.9 from 52.4, the employment measure decreased to 52.7 from 55.1, and the prices index fell to 55.0 last month from 59.5.

Josh Nye, the senior economist at the Royal Bank of Canada (RBC), notes that the U.S. employment growth rebounded to 224k in June and the unemployment rate ticked higher to 3.7%, while the wage growth was steady at 3.1% year-over-year.

• “A nice rebound in US payroll growth will do little to change market calls for the Fed to cut rates later this month, though a 50 basis point move looks less likely. It’s not that the jobs backdrop is weak. Despite some soft payroll reports in recent months, employment growth is tracking 172k year-to-date. That’s down from 223k in 2018 but still well above the ~100k pace of labour force growth.
• So while unemployment ticked up to 3.7% in June, it is still down from last year. Wage growth has been a bit less impressive though, losing momentum in recent months and remaining just above the 3% mark—not enough to generate significant inflationary pressure.”

• Repeats calls for Fed rate cuts

U.S. stock-index futures fell on Friday after the release of better-than-expected June nonfarm payrolls, which might cause a reassessment of the Federal Reserve’s rate path by investors. However, moderate wage gains could still encourage the Fed to cut interest rates this month.

Global Stocks:

(company / ticker / price / change ($/%) / volume)

Statistics Canada reported on Friday that the number of employed people fell by 2,200 m-o-m in June, while economists had forecast a gain of 10,000 and after an unrevised surge of 27,700 in the previous month.

Meanwhile, Canada's unemployment rose to 5.5 percent from 5.4 percent in May, matching economists’ forecast of 5.5 percent.

According to the report, full-time employment increased by 24,100 (or +0.2 percent m-o-m) in June, while part-time jobs declined by 26,200 (or -0.7 percent m-o-m).

In June, the number of private sector employees rose by 23,000 (+0.2 percent m-o-m), while the number of public sector employees grew by 16,200 (+0.4 percent m-o-m). At the same time, the number of self-employed plunged by 41,400 (-1.4 percent m-o-m) last month.

Sector-wise, there were more people employed in health care and social assistance (+22,000 jobs in June), educational services (+13,000), transportation and warehousing (+13,000) and information, culture and recreation (+13,000). In contrast, there were fewer people working in wholesale and retail trade (-16,000), "other services" (-15,000), manufacturing (-15,000), and natural resources (-7,800).

On a year-over-year basis, employment grew by 421,000 (+2.3 percent).

In the second quarter, employment rose by 132,000 (+0.7 percent), virtually all in full-time work.

The U.S. Labor Department announced on Friday that nonfarm payrolls increased by 224,000 in June after a downwardly revised 72,000 gain in the prior month (originally an increase of 75,000). It marked the biggest increase since January.

According to the report, notable job gains occurred in professional and business services (+51,000 jobs in June), in health care (+35,000), and in transportation and warehousing (+24,000).

At the same time, the unemployment rate rose to 3.7 percent in June from 3.6 percent in May.

Economists had forecast 160,000 new jobs and the jobless rate to stay at 3.6 percent.

The labor force participation rate edged up to 62.9 percent from 62.8 percent in May, while hourly earnings for private-sector workers rose 0.2 percent m-o-m (6 cents) to $27.90, following a revised 0.3 percent m-o-m gain in May (originally a 0.2 percent m-o-m increase). Economists had forecast a 0.3 percent m-o-m advance in the average hourly earnings. Over the year, average hourly earnings have increased by 3.1 percent, the same pace as in May.

The average workweek was unchanged at 34.4 hours in June, in line with economists’ forecast of 34.4 hours.

Analysts at TD Securities note that the German factory orders were down -2.2% m/m in May, considerably worse than the -0.2% fall that markets were looking for.

• “The fall in shipments wasn't quite as bad at -1.1%, consistent with a fall in IP of around -1.0% when it's released on Monday.”

Reuters survey reveals the 14-member Organization of the Petroleum Exporting Countries (OPEC) pumped 29.60 million barrels per day (bpd) in June, down 170,000 bpd from May's revised figure. That was the lowest OPEC total since April 2014.

According to the survey, a rise in Saudi supply amid pressure from U.S. President Donald Trump to bring down prices did not offset losses in Iran and Venezuela due to U.S. sanctions and other outages elsewhere in the group. 

Analysts at TD Securities are expecting the Canadian economy to add 5k jobs, slightly below the market consensus for job growth of 10k.

• “Other elements of the report should prove more upbeat, with the unemployment rate holding at 5.4% while wage growth is expected to firm to 2.8% y/y from 2.6% in May.”

Westpac's analysts note that the U.S. dollar is currently broadly unchanged from a month ago despite the market pricing in yet more policy easing by the FOMC.

• “The federal funds rate is now expected to be reduced by 108bps before November 2020 versus 89bps at the time of our June Market Outlook.
• This resilience in the US dollar is, in part, due to its role as a safe-haven and the persistence of global trade and geopolitical tensions – even after the US/China agreed to a truce in Osaka. At least of equal significance however is the fact that the FOMC is now not the only central bank ready to ease policy. Most notable is that the ECB intend to follow suit.
• The rub for the ECB is that they have less scope to ease given their policy stance is extraordinarily easy versus a broadly-neutral FOMC. As a result, against 50bps of cuts from the FOMC in late-2019, we only look for a 10bp cut in the deposit rate from the ECB. Beyond that, the ECB needs to establish they have capacity to ease further.”

Analysts at Danske Bank are expecting that Sweden’s June CPIF inflation to slow considerably to 1.6% y/y, down from 2.1% y/y in May.

• “This is in line with the Riksbank's forecast. In our forecast, this is largely an energy effect, with both fuel and electricity falling sharply and pulling down CPIF by 0.15pp each. However, we differ from the Riksbank in the composition: we expect an unchanged print for CPIF excluding Energy (1.7% y/y), whereas the Riksbank expects a slight increase to 1.8% y/y.”

Carsten Brzeski, the chief economist at ING Germany, notes that German new industrial orders dropped by a painful 2.2% MoM in May, from a slightly upwardly-revised 0.4% MoM increase in April. 

• "After two positive months and hopes for a bottoming out, the downward slide is back again. On the year, new orders were down by 8.6%; the worst YoY drop since 2009. In particular, foreign orders dropped sharply: -5.7% MoM from non-Eurozone countries and -1.7% MoM from Eurozone countries, reflecting continued global uncertainties. After four disappointing months, domestic orders increased by 0.7% MoM. Still, domestic orders have been an even bigger disappointment than foreign orders this year, having dropped by an average of 1.5% MoM since the beginning of the year.
• Today’s sharp drop in new orders clearly undermines the tentative signs of a rebound or at least a bottoming out at the end of the first quarter. In fact, the great order book deflation continues. The last two times order books shrank with a similar magnitude was in 2011/12 and 2008/9. While the former fall ended mildly with a decent rebound, the latter continued and we all know how it ended. Back to the current situation, a strong inventory build-up in the automotive industry also does not bode well for the coming months and brings back the not so distant memories of last Fall. Combined with the weakest June performance of the labour market since 2002 and disappointing retail sales, today’s new orders wrap up a week to forget for the German economy. The fear factor is back."

Danske Bank analysts point out that oil is generally trading on the weak side, setting up for the biggest weekly decline since May.

“Weak global demand concerns seem to be outweighing the recent proposal from the OPEC+ pact to extend supply curbs into 2020 and worries that a renewed US confrontation with Iran may threaten supplies. We continue to believe that oil prices will rebound over the course of this year following the OPEC+ deal, supply concerns in Iran, Libya and Venezuela and a modest recovery in the global economy towards the end of the year.”

European Commission President Jean-Claude Juncker said the process to appoint his successor, Germany's Ursula von der Leyen, was not transparent and marked an unwelcome break with the practice of choosing parties' lead candidates.

"The process was not very transparent," Juncker told, replying to a question about how EU leaders this week selected the next president of the EU executive. The nominee requires European Parliament approval.

He added that his appointment five years ago was transparent as he was chosen by leaders after having campaigned in European elections.

According to analysts at ING, with the release of June nonfarm payroll data and Fed rate expectations, the US dollar is facing a crossroads.

“Markets still attach a 27% probability to a 50 basis point move at the 31 July meeting. The OIS curve also shows that market participants expect one more cut by December and a total of 116bp of easing (almost five cuts) by the end of 2020. Our forecasts are for a 170,000 increase in payrolls (consensus 160k) and 3.3% year-on-year wage growth (consensus is 3.2%). It appears that, unless the report shows a radically lower figure – as happened in May – markets could accept a broadly solid jobs report as confirmation that the July FOMC meeting will result in only 25bp of easing. If today’s numbers materially surprise to the upside, the dollar would jump alongside US Treasury yields as markets may partly scale down expectations for the two additional cuts by end-2019.”

British unit labour costs, a gauge of competitiveness, rose by 2.1% in the first three months of the year compared with the same period of 2018, the sixth consecutive quarter of growth of more than 2%, official statistics showed.

"Our latest figures represent a continuation of the UK's productivity puzzle. This sustained stagnation in productivity in the last decade is at odds with what we've seen after previous economic downturns," Katherine Kent, an official with the Office for National Statistics, said.

Monthly report on italian economy showed:

• Recovery signals for the international economy were scant. Data surprised mostly to the downside both in advanced and emerging countries.

• In the euro area, GDP growth is expected to slow down slightly in the second quarter due to weaker industrial production but it should pick up slightly afterwards.

• Italian economy remains on a moderate growth path nevertheless labour market conditions and household purchasing power are continuing to improve.

• Last month, inflation remained subdued mainly because of most volatile components slow dynamics. On the contrary, the core inflation, although remaining very low, increased marginally.

• In June, consumer confidence decreased sharply and the deterioration was broad based. In the same month also the business confidence worsened. 

• The leading indicator continued to decrease although on a decelerating path suggesting that Italian economy will continue to grow modestly.

According to analysts at ING, today’s Canadian jobs report takes on a sizeable resonance given its proximity to the Bank of Canada meeting on Wednesday.

“According to a Bloomberg survey, investors are positioned for a marginal slowdown in jobs growth (+9.9k) from May and a tick-up in the unemployment rate (5.5%) from the current historical lows. Nonetheless, average hourly earnings may grow even faster in June (2.7%). Overall, the report should continue to portray a tight labour market, thereby fortifying expectations for a neutral BoC next week. We expect the loonie to hold its ground better than its G10 peers should US payrolls trigger a dollar appreciation. USD/CAD gains may be limited to the 1.310 level.”

British businesses have turned gloomier about the economy as the country's political crisis deepens, bucking an improvement in sentiment earlier this year, according to a survey published by an employers group.

Confidence in the economy fell to -28% in the period between May 22 and June 5, down from -19% in April and the first decline registered in 2019, the survey conducted by the Institute of Directors (IoD) showed. The survey of 893 firms coincided with the announcement by Theresa May on May 24 that she would stand down as prime minister.

"Dealing with political uncertainty is part and parcel of leading a business, but this has been taken to extremes over recent years. With the nature of Brexit still ambiguous and another shake-up of key government personnel in motion, many businesses have been holding back on investing in their staff, operations and technology to the detriment of UK productivity growth," Tej Parikh, the IoD's chief economist said.

According to the report from Halifax Bank of Scotland, on a monthly basis, UK house prices fell by 0.3%. In the latest quarter (April to June) house prices were 2.4% higher than in the preceding three

months (January to March). House prices in the three months to June were 5.7% higher than in the same three months a year earlier

June’s annual change figure of 5.7% comes against the backdrop of a particularly low growth rate in the corresponding period in 2018, which has had an impact on year-on-year comparisons.

Russell Galley, Managing Director, Halifax, said: “Average house prices dipped marginally in June, falling by 0.3%, to stand at £237,110. This extends the largely flat trend we’ve seen over recent months. More generally the housing market is displaying a reasonable degree of resilience in the face of political and economic uncertainty. Recent industry figures show demand looking slightly more stable, with mortgage approvals ticking along just above the long-term average. One of the major restraining factors on the volume of transactions in the market continues to be the very low level of stock for sale.”

The percentage of Japanese households anticipating inflation to accelerate a year from now hit the highest level in nearly four years, a central bank survey showed.

But the survey also showed households were more pessimistic about the economy, which is being pressured by slowing global demand and the U.S.-China trade war.

The Bank of Japan's survey on people's livelihood showed the percentage of households who expect prices to rise a year from now was 80.5% in July, the highest level since September 2015. It was up from 78.7% in March.

But a separate index measuring households' perceptions of the economy's performance worsened to minus 25.0 in July, the lowest since June 2016, and falling from minus 19.2 in March.

The survey is among key data the BOJ looks at in assessing the impact of its ultra-easy monetary policy.

Ministry for the Economy and Finance said the balance improved sharply, from -4.9 billion euros (revised figure) in April 2019 to -3.3 billion euros in May 2019, an increase of 1.6 billion euros. It reached its highest level since the outstanding point of December 2017, driven by buoyant exports of military equipment, aerospace products and pharmaceuticals.

In May 2019, exports grew strongly (+ € 2.0 billion, or + 4.6%), after the decline in April (- € 0.9 billion or -2.1%). This marked rebound is due in particular to the peak of deliveries of military equipment, which doubled compared to April and reached their highest level over the last 15 years, as well as by the sharp increase in deliveries of aerospace products (+ 10.5%) and pharmaceuticals (+ 13.4%). At the same time, imports increased slightly (+ € 0.3 billion, or + 0.8%), after the decline in April (- € 1.3 billion or -2.7%): acquisitions of pharmaceuticals (+ 11.9%) and aerospace products (+ 8.3%) were mitigated by the further decline in energy supplies (-3.0% after-6.5%).

On average over 3 months, the balance progressed for the second consecutive month after falling the two previous months. This increase is explained by a decline in imports combined with stable exports over the period.

Cumulative over the last 12 months, the balance is recovering in May after slightly fluctuating during the second half of 2018 and the first quarter of 2019. It reached -54.6 billion euros against-59.2 billion euros in 2018 and -58.1 billion euros in 2017

“We expect payrolls to rebound from the surprisingly weak 75,000 reading in May, we doubt it will be enough to drag the 6M average meaningfully higher. We look for payrolls growth of 170,000. The consensus is 164,000 within a range of expectations of 100,000 to 205,000. Monthly wage growth has been average a little over 0.2%MoM year to date, but we look for a month-on-month increase of 0.4% in June to reflect both the competition for workers, but also the technical point that there were only 20 working days in June versus 23 in May. The unemployment rate dropped to 3.6% in April and stayed there in May – the lowest level since December 1969. We expect it to remain there again this month but the balance of risks are more to the upside than the downside given slowing employment growth and the outside possibility that higher wage growth may attract some people back to the labour force.”

Based on provisional data, the Federal Statistical Office (Destatis) reports that price-adjusted new orders in manufacturing had decreased in May 2019 a seasonally and calendar adjusted 2.2% on the previous month. Economists had expected a 0.1% decrease. For April 2019, revision of the preliminary outcome resulted in an increase of 0.4% compared with March 2019 (provisional: +0.3%). Price-adjusted new orders without major orders in manufacturing had decreased in May 2019 a seasonally and calendar adjusted 3.0% on the previous month.

Domestic orders increased by 0.7% and foreign orders fell by 4.3% in May 2019 on the previous month. New orders from the euro area were down 1.7%, new orders from other countries decreased 5.7% compared to April 2019.

In May 2019 the manufacturers of intermediate goods saw new orders fall by 1.5% compared with April 2019. The manufacturers of capital goods showed decreases of 2.8% on the previous month. For consumer goods, a decrease in new orders of 0.7% was recorded.

EUR/USD

Resistance levels (open interest**, contracts)

$1.1452 (2588)

$1.1404 (3603)

$1.1352 (4418)

Price at time of writing this review: $1.1278

Support levels (open interest**, contracts):

$1.1249 (2699)

$1.1200 (3048)

$1.1150 (3408)

Comments:

- Overall open interest on the CALL options and PUT options with the expiration date July, 5 is 71119 contracts (according to data from July, 3) with the maximum number of contracts with strike price $1,1300 (4418);

GBP/USD

Resistance levels (open interest**, contracts)

$1.2751 (817)

$1.2703 (233)

$1.2660 (362)

Price at time of writing this review: $1.2580

Support levels (open interest**, contracts):

$1.2546 (2046)

$1.2499 (2220)

$1.2450 (811)

Comments:

- Overall open interest on the CALL options with the expiration date July, 5 is 17460 contracts, with the maximum number of contracts with strike price $1,2950 (2622);

- Overall open interest on the PUT options with the expiration date July, 5 is 16815 contracts, with the maximum number of contracts with strike price $1,2500 (2220);

- The ratio of PUT/CALL was 0.96 versus 0.93 from the previous trading day according to data from July, 3

* - The Chicago Mercantile Exchange bulletin (CME) is used for the calculation.

** - Open interest takes into account the total number of option contracts that are open at the moment.